Do regulators’ random inspections have “teeth”? Evidence from the valuation of corporate cash holdings

Key Points

• Regulatory inspections impact the valuation of corporate cash holdings, revealing significant financial implications.
• Evidence indicates a 15% increase in cash holding value post-inspection, suggesting effectiveness of regulation.
• The analysis includes a comprehensive look at corporate cash holdings using financial performance metrics across various firms.
• These findings imply that regulatory inspections may enhance the financial accountability of corporations.